Determinants of Inflation, Exchange Rate, and Output in Nigeria

33 Pages Posted: 15 Feb 2006

See all articles by Louis Kuijs

Louis Kuijs

International Monetary Fund (IMF); World Bank

Date Written: November 1998


This paper presents a macroeconomic model of the Nigerian economy. The long-run relationships pertaining to the markets for money, foreign exchange, and (non-oil) output are estimated. Subsequently, dynamic equations are estimated for the price level, the real exchange rate, and output. The results are instrumental in explaining the dramatic developments on the foreign exchange market during 1983-86 and 1992-94, the secular depreciation of the real exchange rate since 1985, and the rise and fall of inflation during 1991-97. The methodology could usefully be applied to other economies whose exports are insensitive to exchange rate movements (e.g., other oil-based economies).

Keywords: Nigeria, co-integration, exchange rate, inflation, output

JEL Classification: E30, E51, 055

Suggested Citation

Kuijs, Louis and Kuijs, Louis, Determinants of Inflation, Exchange Rate, and Output in Nigeria (November 1998). IMF Working Paper No. 98/160, Available at SSRN:

Louis Kuijs (Contact Author)

World Bank ( email )

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International Monetary Fund (IMF) ( email )

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